This invention relates to the field of prediction of changes in economies at the microeconomic level.
The most common tools currently used for economic modeling are either macroeconomic or computable general equilibrium (CGE). Macroeceonomic models use complex multivariate regression analysis on aggregate data to represent the economy as a sequence of linear equations. CGE models require the solution of systems of simultaneous equilibrium equations to obtain a forecast. The economics profession has devoted more than six decades to devising and improving these economic models. In particular, econometric techniques of parameter specification have reached a high degree of sophistication. Hence, the macromodels can provide accurate forecasts. Problems arise, however, when totally new economic policies are introduced, where no past relevant data is available to develop the modeling parameters.
Microanalytic simulation models have potential to overcome these problems. Present microanalytic models, however, can not compete with the macromodels in terms of forecast accuracy. Two microanalytic models have been tried: the Urban Institute model, originally developed by Orcutt, and the Transaction model, developed by Barbara Bergmann. The Urban Institute model uses macroestimation to derive non-household sectors and incorporates those sectors through feedback loops. See, e.g., Policy Exploration through Microanalytic Simulation, Orcutt, Caldwell, and Wertheimer, Urban Institute, Wash. D.C. 1976. The Transaction model is a nonstochastic, semi-macro model. Neither of the two are competitive with macromodels in accuracy. See, e.g., A Microsimulated Transactions Model of the United States Economy, Bennett and Bergmann, Johns Hopkins University Press 1986.
There is a need for a microsimulation model that takes advantage of increasing computing capacity, advances in evolutionary learning models, and microeconomic data to accurately predict changes in complex economies without a need for modeling parameters based on past macroeconomic data.